ASIC is taking legal action against Latitude Finance Australia and Harvey Norman for their allegedly misleading promotion of interest-free payment methods.
The regulator claims that ads between January 2020 and August 2021 promoting “no deposit” and “interest-free” payment methods for purchases at Harvey Norman were misleading.
This is because these ads did not disclose that consumers could only use the interest-free payment method if they applied for and used a Latitude GO Mastercard.
Furthermore, ASIC alleges that the ads misrepresented the true cost of using this method since they did not adequately disclose establishment fees and monthly account service fees.
“ASIC is concerned the advertising did not provide consumers with the full picture, that they could only use the interest-free payment method by applying for and using certain Latitude credit cards,” said ASIC deputy chair Sarah Court.
“These credit cards, ASIC alleges, attracted substantial fees over the course of the 60-month payment term, and exposed consumers to the risks of incurring further debts and charges, as well as potentially affecting their credit rating.”
According to ASIC, customers that signed up for the Latitude GO Mastercard from 16 March to 11 August 2021 and made a purchase using the 60-month, interest-free payment method would be liable to pay at least $537 in fees on top of their original purchase amount.
The regulator said that it is seeking declarations, pecuniary penalties, injunctions and other orders against Latitude and Harvey Norman.
“Consumers have a right to make informed choices. Credit providers and retail partners such as Latitude and Harvey Norman should ensure that their advertising clearly discloses all important information about payment methods and any fees,” said Ms Court.
In a media release issued on Wednesday, Latitude acknowledged ASIC's filing of civil proceedings.
“Latitude takes these allegations very seriously and has worked cooperatively with ASIC during its investigation,” the company said.
“Latitude is now reviewing ASIC's claim and will not be commenting further at this stage given the matter is before the courts.”
A date for the first case management hearing is yet to be scheduled by the court.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.